DECEMBER 2014 Issue
F R E E T H E D AY
2015
THE YEAR OF CHANGE
“ There are many challenges in running a business. One of the unspoken pains business owners face is a tremendous feeling of loneliness. It's very lonely to stick your neck out there, to take on the world.”
Also inside this issue
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• Re-introduction of Fuel Excise Indexation
• Free the day
• How Financially Fit are You?
• A Cloudy Future
• What is the Deal With Cost vs Advice in General Insurance?
• Where are Financial Services Heading?
• In-House News • Contact us
FREE THE DAY
by Ian Congram Managing Director POWERS FINANCIAL GROUP
There is a different way to do business that can free you from these stresses and demands. We called it “Free the Day”:
6. Don’t lose sight of your business goals You should have developed a Business Plan when you began your business, but many business owners fail to check it regularly. The Business Plan you originally developed is really important to keep you on track. It not only explained your short-term goals but also the longterm ones. Developing your Business Plan and amending when necessary should ensure that you are always moving forwards and this should help your business to reach its potential.
1. Build a Trusted Team Most people by nature get some satisfaction from interacting with people, working toward the same goal. Even if your business is a one-man show, you can find an outside mentor or trusted business partner to bounce ideas off.
7. Don’t lose sight of your personal goals Just sitting and thinking about what you want to achieve is not going to get you there. You have to work at it to make it happen. Make sure that any decision you make takes you closer to achieving your goals. Stay positive and work hard and your goals will become reality.
2. Remember why you went into business Make sure you don’t get trapped doing the wrong type of work and consider the benefits of using a trusted business partner to do the jobs you shouldn't be doing.
8. Nurture your charismatic side Charismatic leaders don’t feel the loneliness and use a wide range of methods to manage their image. If you are not naturally charismatic, practice diligently to develop your body and verbal language skills.
Time, money, keeping clients happy, you name it. You’re creating something out of nothing. Some days in fact you may question why you ever made the leap of faith. Running your own business is overwhelming; there is a constant demand on your time and energy (both mental and physical).
3. Balance home and family The best leaders are able to maintain a balance in their lives. They have learned to say no. They accept that their families and their subordinates sometimes need to say no. They turn their work into play and then play hard. 4. Don’t work where you live Just being able to live and work in separate environments can really help. The change of scenery and external stimulation, whether a coffee shop or just the sunlight, will allow you to switch gears and keep a healthy attitude. 5. Meet Customers online Use Social Media to make connections with clients, customers and peers on-line. It helps to socialise with several hundred people all at once, even if you never see them face-to-face and you can “instant message” oneon-one. LET’S TALK...BUSINESS Page 2
9. Maintain non-business activities Hearing about your friends going skiing or spending some time resting and relaxing on holiday can be very detrimental to your self esteem. Work to keep up on your own hobbies and participate in community action events. 10. Demand Freedom Making time for the important things in your life is crucial, but time is one thing most business owners don’t have. Make sure you free yourself from the mundane jobs that don’t make you money, use up all of your time and take your focus away from the real reasons you went into business. Contact us today to find out how Cloudforce Bookkeeping & Business Support can help free up your time as a business owner on 07 3906 2881.
by Nick Pollins Business Improvement Manager POWERS FINANCIAL GROUP
A CLOUDY FUTURE
Cloud Computing has had a big year in 2014. Thousands of organisations – big and small – have begun moving their IT infrastructure and software into a Cloud environment. The benefits speak for themselves: Cloud Computing enables mobility and improves office productivity and efficiency.
cited Xero as their program of choice, followed by MYOB and a variety of others, including Reckon, Intuit, Attaché Saasu.
Although the ‘Cloud’ has become a buzzword, it represents not just the future of computing but business as a whole. As SMEs prepare for 2015, the Cloud is one tool they can think about engaging with to assist with productivity. A significant amount of services now operate in the Cloud and SMEs are becoming more used to the idea of a recurring subscription for what was once a standalone piece of software.
Cloud-based software is popular overall, with 59% saying they use Cloud software for other business services such as data storage, customer relationship management and document filing systems.
At the same time, the huge amount of data and analytics being pumped into existing business processes, thanks to new digital models, is allowing SMEs to make better decisions based on more accurate information.
A study by Right Scale has found that security concerns around Cloud Computing are on the decline. Although still the most cited challenge among Cloud beginners, concerns decreased by 13% from 2013 to 2014. This is a sign that organisations are beginning to trust Cloud Computing and are willing to move more of their IT infrastructure to Cloud services with 47% reporting they intend to increase their usage of Cloud-based software in the year ahead.
A report by IBM predicts that by 2015, there will be one trillion Cloud-ready devices connected to the Internet. As a result, more and more employees will be using their personal and company devices to access important work information via Cloud-based services. In a recent survey one-third of respondents said they used a Cloud-based accounting software package. Among those who do, the most common benefit cited was realtime accessibility of data, at 25%. The joint second-most common benefits included increased efficiency within the business and improved business systems.
One of the biggest challenges facing businesses, both large and small, is the amount of secure information under their responsibility.
We all know an organisation or company that has been slow to adopt new technology and as a result, faded away because they couldn’t keep up with the competition. In two years’ time, can you afford to be that organisation? If you would like to find out how our Cloud Accounting Services can help you stay ahead of the competition, call us today on 07 3906 2881!
Among those who use Cloud Accounting Systems, 56%
Let’s Talk...Words of Wisdom “ It’s fine to celebrate success but it is more important to heed the lessons of failure” Bill Gates, Business Magnate, Philanthropist and Co-Founder of Microsoft
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From all of the team at Powers, we wish you a Merry Christmas. Over the holiday season, we will be donating to Beyond Blue. If you would like to donate to this excellent cause, go to beyondblue.org.au We look forward to seeing you in 2015.
WHERE ARE FINANCIAL SERVICES HEADING?
by Charles Page Director POWERS SUPERANNUATION SERVICES
According to the Financial System Inquiry, Superannuation changes could boost retirement incomes by 40%. The findings of the long-awaited inquiry, call for a major shake-up of Superannuation to improve outcomes for consumers amongst the 44 recommendations. The Chairman of the FSI, David Murray, a former CEO of the Commonwealth Bank, said he “wanted legislation to clearly state the purpose of superannuation and to remove it from the industrial relations system to stop it from being used as a political football.” THE REPORT IN PART CALLS FOR: • Superannuation funds should be banned from borrowing because of the risk to the taxpayer if the fund collapses • Superannuation fund fees should be reduced Murray said “These initiatives have the potential to increase retirement incomes by 25 to 40%.”. Additionally he wants to change the structure of the “Union Super Funds” to have more independent trustees rather than the existing arrangements with equal employee and employer trustees. He believes this can lead to lower fees for members as part of the increase in retirement incomes. He also recommended that annuities be offered as the default option for accessing Superannuation after retirement. Greater use of annuities may help make retirees’ superannuation savings go further, and reduce the need for them to draw on the age pension. He believes that Superannuation has become to complicated and sees the changes as a move toward better retirement income rather than wealth accumulation. LET’S TALK...BUSINESS Page 4
Wealth accumulation tends to create welfare entitlement arbitraging. The Self Managed Superannuation Fund Professionals’ Association of Australia (SPAA) has welcomed the FSI’s decision to not recommend imposing controls on SMSF balances or set-ups, in spite of various submissions calling for limitations to be imposed. Also the recommendation for obtaining bipartisan support for Superannuation is an “enormous positive” to come out of the report. The FSI’s report is a “ringing endorsement” of the SMSF sector. The fact that SMSFs are barely mentioned in the report and a recommendation that they should not be prudentially supervised is evidence of this. Pauline Vamos of the Superannuation body ASFA welcomed the review of fees in the industry saying: “It is legitimate to question fees and charges.” Further, “The recommendations of the Financial System Inquiry should be above politics and adopted after industry consultation.” Whether all of the recommendations will be implemented or that they are beneficial for all of Superannuation remains to be seen. Is banning or limiting borrowing in an SMSF the answer to a risk that might not necessarily exist? I am not convinced. To find out more about Self Managed Superannuation Funds, contact Powers Superannuation Services today on 07 3906 2888.
RE-INTRODUCTION OF FUEL EXCISE INDEXATION
by Katrina Engel Manager POWERS ACCOUNTANTS & ADVISORS
Fuel Excises are not a new concept in Australia. The first Excise on domestic petrol was levied in 1929 to raise revenue for road building. Various Excises and duties were introduced and amended in years to come until, in 1983, six-monthly indexation of the Fuel Excise was introduced. This Excise was introduced in response to changes in the cost of living as measured by the Consumer Price Index (CPI) to maintain the real value of the excise. It remained in place until 2001 when indexation was abolished by the Howard Government to alleviate the impact of high petrol prices. Some estimates indicate that had Fuel Excise indexation not been abolished in 2001, the Government could have collected an extra $5.5BN - almost the same amount as would be raised if GST were increased by 1%. Current Indexation In the 2014-15 Budget, the Abbott Government proposed that biannual indexation of the Fuel Excise to the CPI be reintroduced. On 10 November 2014, these Proposals took effect. What does it mean? Before the re-introduction of Fuel Excise indexation, Fuel Excise remained at 38.143 cents per litre. As of 10 November 2014, the rates of excise and excise equivalent Customs Duty for fuels will apply as follows: • 38.6 cents per litre for liquid fuels • 10.1 cents per litre for liquefied petroleum gas (LPG) • 21.2 cents per kilogram for compressed natural gas (CNC) and liquefied natural gas (LNG). In the 2014-15 year, it is estimated that this indexation will add approximately one cent per litre to the previous rate of the Fuel Excise of 38.143 cents per litre. This translates to an additional weekly cost of 40.7 cents per week for
the ‘average household’ and 55.1 cents per week for the ‘average family’. This rate is predicted to increase biannually, as the Excise is being indexed to the CPI, which is currently increasing at a rate of 2.9% annually. In correlation, this Excise is expected to gather net revenue of $179.3M in 2014-15, $400M in 2015-16, $720M in 2016-17 and $1.05BN in 2017-18. Fortunately, automotive fuel only makes up 3.66% of the total CPI, thus economists say that this small increase in fuel prices should not impact on other costs of living. The Government has announced that the money collected from the Fuel Excise indexation will be used as funding for additional productivity-enhancing road infrastructure projects. On the same day that the Government introduced these proposals, they also tabled an Amended bill to ensure individuals and businesses who are eligible to claim Fuel Tax Credits and recipients of Cleaner Fuels Grants are not negatively impacted. The Government’s intention is to ensure that there is no financial impact arising from this implementation by way of tariff proposals over the next 12 months for Fuel Tax Credit recipients, as well as Cleaner Fuels Grant and Ethanol Production Grant recipients. However, this Bill is not yet law, so stay tuned for further updates on the matter. If the Senate refuses to pass the increase in the next twelve months, the Government will be forced to refund the tax to fuel companies. If you have any questions about how the fuel excise indexation will impact you, please contact your Powers Accountant. LET’S TALK...BUSINESS Page 5
HOW FINANCIALLY FIT ARE YOU?
by Warwick French Director POWERS INVESTMENT & FINANCE SERVICES
What is your idea of being fit? For some people it is the ability to run a marathon. Others may focus more on a sprint, weights or flexibility. The point is: fitness is personal. It isn’t about running twice a day or being able to bench your body weight. It’s about what level you want to reach and what steps you take to get there. Just like your health, your financial affairs can be measured in terms of “fitness”. The good news is that just like getting into shape, you can assess your financial fitness and take actions to improve it. If you keep your goals in mind as you earn and spend your money, you can achieve a high degree of financial health over the long run. So the question is, how fit are your finances? How can you measure it? Below we look at some key measurables when assessing how fit your finances are. Manage your Income and Outgoings In the same way fitness is often a result of a healthy diet and exercise (calories you consume and work off), when it comes to your finances, you need a balanced budget to ensure your income and outgoings are working efficiently for maximum financial outcomes. Sticking to a budget = financial fitness. Saving and spending Have you been consuming too many credit cardohydrates? That can lead to serious weight-gain in the area of repayments. They’re easy to put on, slower to take off. We’ve all been there. So toning your credit card debt can be done and the exercise will make you strong. Saving, like not eating that extra chocolate slice, also takes willpower. Increasing saving and reducing spending = financial fitness. Investments Just as the fittest bodies have a high ratio of muscle to fat and bone, a range of different kinds of investments LET’S TALK...BUSINESS Page 6
can give you a level of financial security that will help you worry less about the future. A mix of investments that can be flexible as your life and circumstances change is also a key for success. Growing your money through investments = financial fitness. Life after work There are so many things you are planning for when you finish working and you have got to be financially fit in order to do them. By focusing on building strength and endurance in your financial muscles, you will be fit enough to do what you want in retirement. Planning for your retirement with superannuation and other investments = financial fitness. Insurance Have you ever noticed how many super-fit people don’t even look it? Their strength and endurance only becomes apparent when they put stress on their muscles. When it comes to money, the fittest people financially often have an invisible asset working for them too. It’s called insurance. They know that even if they get sick or can’t work for a while, they’re covered. Being covered for unexpected financial situations = financial fitness. So, are you financially fit? If you’re like most people, you could probably be a little fitter than you are now. The good news is that almost everyone can get fitter financially. Maybe it’s time to consider talking to a Financial Planner about your financial fitness. It’s so much easier if you have someone to work-out with. To discuss your financial fitness goals, contact Warwick French from Powers Investment & Finance Services on 07 3906 2888.
Let’s Talk...Words of Wisdom “ How many people are completely successful in every department of life? Not one. The most successful people are the ones who learn from their mistakes and turn their failures into opportunities” Zig Ziglar, American Author and Motivational Speaker
WHAT IS THE DEAL WITH COST VS ADVICE IN GENERAL INSURANCE?
by Steve Weil Senior Broker Tony Bemrose Insurance Brokers
In my day-to-day work as a Commercial Insurance Broker I get the unenviable pleasure of hearing a raft of marketing and sales white noise about what is important. One of the favourite chestnuts of various sources of this noise is that we’re all here to pay claims when you need them. Suncorp marketed very successfully in this vein after the 2011 floods.
Recently I had the opportunity to meet with a new client, to review his portfolio. A pretty standard process for a decent broker. The client was concerned about his ability to continue to fund the cover.
The head scratcher for me is that if the payment of claims is so important to everyone (and I agree it should be), why is it that 9 out of 10 times when I meet with a new referral, all they ask about is cost?
During the course of the discussion and firing a range of questions at the client, we pretty quickly discovered that when his existing cover was established, his business had not been correctly defined. This led to the establishment of cover that wasn’t exactly what he needed and he was subject to more expensive underwriting terms.
I have nothing more than anecdotal data to back this up, so I think there might be a couple of reasons for this. Firstly, I think that cost seems to be the only frame of reference available to the average consumer and secondly that it is difficult for the customer to quantify and understand the differences between policies or insurance brokers. I’m pretty sure I’m on the mark here because the web-based direct insurers are banking big money on this being the case. What I do know is that according to ASIC data, up to 60% of homes and 80% of businesses are either underinsured or uninsured. This means that the majority of people are either dangerously misinformed, or, they have deliberately underinsured to save money.
We were able to apply a more appropriate insurance contract, get the client re-underwritten and a premium that was cheaper by about 35%. Ironically, getting the right advice not only achieved a significant premium saving but potentially a six or seven figure benefit in the event he sustained a serious claim event. The point here is that getting good advice is not necessarily expensive. If you get the feeling that your adviser is only talking about cost, or if they do not really understand your business, then please email me at steveweil@tbib.com.au or call me on 07 3252 5254. LET’S TALK...BUSINESS Page 7
STRONGER TOGETHER
IPAD COMPETITION WINNER Congratulations to Angela Hampton for winning our iPad Mini Competition! Recently Powers held a table at the Renaissance Retirement Village Spring Fair. As part of our presence, we ran a competition to win an iPad Mini and we are pleased to announce that the winner was Angela Hampton of Hampton Fine Jewellery and Design. Congratulations to Angela (pictured left with Director of Powers Superannuation Services, Charles Page). Keep a sharp eye on the blog on our website for more upcoming events and competitions! A Powers client passes a Major Milestone In June of this year, one of our most recognised primary producer clients, Leonard ‘Len’ Tucker became a centenarian by celebrating his one hundredth birthday. Such a special occasion is to be recognised and we wish Len and his family many happy returns.
Social Media The Powers Financial Group Facebook page recently passed another milestone in reaching two hundred likes. Make sure you head to our Facebook page facebook.com/powersfinancialgroup to stay up to date on all of the latest news and current events.
New Team Members Powers have added several new team members to the Group. Accountants Kyle Bonerath, Angelo Phaltang, Dileepa Sampath and Balendran Senthuran. Kyle joined the Rockhampton Office, Angelo is based in Brisbane and Dileepa and Sentu joined the Colombo Office. Powers also welcomed Karen Hayward as Business Development & Sales Consultant in our Brisbane Office.
Contact us
For further information on any of the articles in this issue, please contact your local office:
BRISBANE
BILOELA
ROCKHAMPTON
MONTO
10/ 8 Metroplex Avenue
54 Callide Street
75 High Street
3 Newton Street
Murarrie QLD 4172
Biloela QLD 4715
North Rockhampton QLD 4701
Monto QLD 4630
PO Box 518
PO Box 98
PO Box 5161
PO Box 69
Cannon Hill QLD 4170
Biloela QLD 4715
Red Hill Rockhampton Qld 4701
Monto QLD 4630
P 07 3906 2888
P 07 4995 6677
P 07 4928 1555
P 07 4166 1366
F 07 3906 2889
F 07 4992 1787
F 07 4926 1184
F 07 4166 1343
mail@powers.net.au www.powers.net.au
The information in this document is of a general nature and is provided for information purposes only. It does not take into account your particular objectives, financial situation or needs and should not be used as a substitute for independent advice from a qualified professional. Limited liability by a scheme approved under Professional Standards Legislation other than for the acts or omissions of financial services licensees. All financial advice is provided by Authorised Representatives of Professional Investment Services Pty Ltd AFSL 234951 ABN 11 074 608 558.